Menzies 2021 revenue up 27% to $1.35bn on solid air cargo biz
Annual cargo volume increased 42 percent to 1.7 million tonnes in 2021 from 1.2 million tonnes
Scottish cargo handling company John Menzies plc, which is in talks to be acquired by Kuwait-based National Aviation Services (NAS) and Agility, today reported a 27 percent increase in 2021 revenue to $1.35 billion on robust air cargo business, returning flight volumes, management actions to control costs and government support.
The annual cargo volume increased 42 percent to 1.7 million tonnes in 2021 from 1.2 million tonnes. Underlying operating profit of $76 million reversed the $24 million loss in 2020, " according to an official statement.
The company raised equity of $30 million in May 2021 to fund business development and M&A pipeline, and reduce leverage. "Strong cash flow resulted in substantial cash and undrawn banking facilities with available liquidity of $225 million. Net borrowings, including lease liabilities, totalled $499 million. Net debt was $267 million, 2.7 times underlying operating profit before depreciation and amortisation."
Menzies growth strategy
Long-term margin opportunity enhanced by structural cost savings, entry into higher margin emerging markets and enhanced product mix
Significant air cargo growth from greater global reach and continued commercial success
Record Air Menzies International (AMI) freight forwarding revenue and profits
New aviation services markets established in Pakistan and Iraq
Successful entry into new emerging aviation markets with expansion into China, Costa Rica, El Salvador and Guatemala; and
Acceleration of commercial win momentum based on net wins contributing $112 million incremental annual revenue, highlighted by the Avianca cargo win at Miami, outsourcing ground services with Qantas across Australia, and renewals with easyJet at 23 airports in Europe.
"I am delighted to report a strong set of results for 2021, despite the continuing impact of Covid on aviation activity levels, '' says Philipp Joeinig, Chairman and Chief Executive, John Menzies plc.
"The rebalancing of our business as a major aviation logistics player continues at pace. We have seen significant growth in our air cargo business by winning contracts and widening the global reach of our network, while our fuel and ground services businesses go from strength to strength. The reshaped business is emerging strongly from Covid and our opportunity for growth is significant. Our future growth will be driven by continued recovery in volumes, growth in the global aviation market, further commercial gains and the successful conversion of our exciting business development pipeline. As a result of significant management action to reduce costs, we expect that this growth will be achieved while delivering structurally higher margins."
"We anticipate that our air cargo business line will continue to grow reflecting ongoing, strong demand for fast and flexible logistics solutions for moving freight worldwide. In addition, we expect that the steady increase in passenger flight volumes will continue and that this trend will accelerate as we progress through 2022. This recovery will extend beyond 2022 as air travel activity volumes are not expected to return fully to the levels that we saw pre-pandemic until 2024. This continued recovery would support further growth in revenues for our fuelling and ground services businesses into the medium-term.
"We are anticipating that the commercial progress that we have seen since the start of the pandemic will continue. Since the year end, we have seen this momentum continue, with the renewal and expansion of a five-year contract to provide into-plane fuelling and fuel farm services for Shell in the UK and gaining a five-year cargo contract with Geodis at Amsterdam. Our pipeline of opportunities is full. In 2022, we are targeting to generate approximately $100 million of net new annualised revenue, and several business development opportunities that would deliver approximately $200-275 million of new revenue over the short- to medium-term."
After consultations with the Takeover Panel, NAS now has time till March 31,2022 (an extension from the earlier deadline of March 9, 2022) to either announce a firm intention to make an offer for Menzies or announce that it does not intend to make an offer. It may be mentioned here that the Menzies board had recommeded an offer of 608 pence/share from NAS to its shareholders.
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